Cocoa rallies on chart-based buying

FCOJ (NYBOT:OJF14)

General Comments: Futures closed higher on speculative buying tied to the losses USDA showed in its production reports last week and on cold weather that was reported in the Eastern part of the US. That gave some speculators the idea to buy some Contracts as the freeze season is not all that far away. Traders are now expecting USDA to lower production even more in coming production reports. The greening disease has affected crops in a bigger way than many in the trade expected. Demand remains weak and there have been no tropical systems to hit the state. Growing conditions in the state of Florida remain mostly good. Dry weather has returned and conditions are said to be very good in almost the entire state. Temperatures are warm. Harvest continues under good conditions. Brazil is seeing near to below normal temperatures and dry conditions or a few showers.

Overnight News: Florida weather forecasts call for a few showers this weekend. Temperatures will average near to above normal.    

Chart Trends: Trends in FCOJ are up with objectives of 143.00 January. Support is at 131.00, 130.00, and 126.00 January, with resistance at 138.50, 140.00, and 143.00 January.

COFFEE (NYBOT:KCZ13)

General Comments: Futures were lower as the Brazilian Real weakened against the US Dollar. Industry and producers appeared to be quiet. Traders think that there is still a lot of Coffee to sell in Brazil and in northern South America and also know that a big crop is coming from Vietnam. All these countries and regions have been offering with low differentials. Vietnam is at harvest. So far, offers from Vietnam have been light. Brazil has a lot of Coffee to sell yet, but the market there is quiet. The rest of northern Latin America was quiet, but there is talk of a lot of Coffee there as well. The new harvest is underway in Central America. Brazil is studying new support programs for producers in that country and could announce something next week. ANACAFE said that Guatemalan production might not be more than 3.07 million bags, the lowest since at least 1991.

Overnight News: Certified stocks are lower today and are about 2.701 million bags. The ICO composite price is now 98.11 ct/lb. Brazil should be mostly dry today and tomorrow, but will get showers on Sunday into next week. Temperatures will average near to above normal. Colombia should get scattered showers, and Central America and Mexico should get light showers. Temperatures should average near to above normal. Vietnam exported 61,100 tons of Coffee in October, 40% less than last year. LIFFE stocks are now 4,877 lots.

Chart Trends: Trends in New York are mixed. Support is at 102.00, 99.00, and 96.00 December, and resistance is at 107.00, 108.00, and 110.00 December. Trends in London are mixed. Support is at 1430, 1400, and 1370 January, and resistance is at 1480, 1520, and 1575 January. Trends in Sao Paulo are mixed. Support is at 128.00, 125.00, and 122.00 December, and resistance is at 132.50, 135.00, and 138.00 December.

SUGAR (NYBOT:SBH14)

General Comments: Futures were lower as the Real in Brazil weakened against the US Dollar. Traders remain bearish as well in reaction to the ISO estimate of surplus production of 4.7 million tons this year. The surplus production was 10.6 million tons last year. Chart trends remain generally down. Countries like India and Thailand are selling as much as possible. Traders have noticed that the world still has plenty of Sugar available and that the demand is not real strong. Weather conditions in key production areas around the world are rated as mostly good. There has not been any news of losses to Sugar areas in Vietnam and China in the wake of the storm that moved into those countries after devastating Philippines. Traders are also watching weather in the Bay of Bengal where more rain could hurt some Sugar production potential. Today is last trading day for December contracts in London.

Overnight News: Brazil could see showers with near to above normal temperatures.

Chart Trends: Trends in New York are down with objectives of 1775 March. Support is at 1780, 1770, and 1750 March, and resistance is at 1825, 1850, and 1880 March. Trends in London are down with objectives of 457.00 March. Support is at 468.00, 465.00, and 463.00 March, and resistance is at 478.00, 484.00, and 490.00 March.

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About the Author
Jack Scoville

Jack Scoville is a veteran futures market analyst specializing in grains, softs, rice, oilseeds, and tropical products such as coffee and sugar. His industry contacts in South America, Europe, Asia, and North America provide him with a unique and comprehensive view of these markets. Jack began working in the futures industry over 30 years ago and spent 10 years working on the floor of the Chicago Board of Trade in various roles, starting with The PRICE Futures Group since it was established in 1988. Jack writes daily commentaries - Morning Grains and Softs, in both English and Spanish and is regularly quoted around the world by news & wire services including Dow Jones, AP, Bloomberg, and Reuters. You can contact Jack by phone at (312) 264-4322 or by email at jscoville@pricegroup.com. Learn even more on our website at www.pricegroup.com.

Futures and options trading involves substantial risk of loss and may not be suitable for everyone. The information presented by The PRICE Futures Group is from sources believed to be reliable and all information reported is subject to change without notice.

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